Outgoing army chief General V K Singh’s arguments against the Kolos Tatra are, in fact, nothing new for the government. For, the Comptroller and Auditor General (CAG) had, a dozen years ago, spoken on identical lines about the Czech company’s high-mobility trucks. The observations were made in CAG’s report on BEML published way back in 2000, against the backdrop of the Kargil war.
That audit of the public-sector BEML had revealed slow pace of indigenisation, large unsold inventories and the army being made to pay a higher price for buying these vehicles. BEML has, since 1987, supplied Tatra trucks to the Indian Army, which now has an estimated 7,000 of these. The Bangalore-headquartered PSU could not be reached for comment.
Recently, media reports suggested the Army chief had objected to the Tatra deal on the ground of lack of indigenisation. While 70 per cent of them are being brought from abroad, these trucks are left-hand driven and sold at a higher cost.
As for “lack of indigenisation”, the point was first mentioned by the CAG in 2000. “Indigenisation targets were only partly achieved in the Kolos Tatra vehicles...and large unsold inventories were a feature of Kolos Tatra.... Investment of Rs 34.94 crore in creating infrastructure for production of Kolos Tatra vehicles without any firm commitment from the ministry of defence proved unproductive as the company continued to import most of the components,” said its audit.
BMEL, in its defence, had then put the blame of the slow pace of indigenisation on a lower number of orders by the army. The CAG was prompt to differ on this, dubbing it to be “false”, as the number of orders from the Army had shown a steady increase. In the case of rising orders from the Army, the CAG questioned, “Why hadn’t indigenisation picked up pace?”
Further, the audit, criticising the ministry of defence for its role, noted the ministry’s reply “only brings to focus the fact that its different departments have not been working in full concert as a result of which huge investment made by the company on the specific understanding that sufficiently large orders would be received on a regular basis, has proved to be substantially infructuous”. Also, the audit board “is particularly surprised at the fact that the company has been allowed to suffer in spite of umbilical relationship between it and the ministry which had prompted the management to take up projects of specific interest to the user departments/ services of MOD without a definite commitment to economic order levels”.
There were then repeated instances where the CAG found fault with BEML in its dealing with Tatra. In 2001, the CAG, while auditing the Review of Procurement for Operation Vijay, found the import of 3,250 Kolos tyres from Tata Sipox at a cost for Rs 3.37 crore was done while ignoring the “vetting comments of the controller of quality assurance that tyres made by MRF were technically superior and import be made if critically required”. This import cost the exchequer a loss of Rs 83.33 lakh, according to the CAG.
In a 2009 audit of BEML, the top auditor had said that for the 50 4x4 Tatra vehicles, BEML accounted for sale even when the job card showed production had not been completed. “Though the production was not complete (March 31, 2008) as evidenced from the job cards and information in the company’s ERP system, the company accounted for sale of Rs 18.38 crore and profit of Rs 2.04 crore,” said the report.
It also recorded the favour accorded to Tatra by BEML. The audit said BEML incurred an additional expenditure of Rs 26.62 crore by agreeing to request the supplier (Tatra Sipox(UK) Limited) to amend the currency of payment clause, which was in contravention of the terms of the purchase order.
At present, the CBI is investigating the procurement of Tatra trucks through Vectra and BEML (earlier, Bharat Earth Movers Ltd) by the armed forces. While Vectra holds a majority stake in the Koprivnice-headquartered Tatra and Tatra Sipox (UK) Limited, which makes military trucks, BEML functions under the ministry of defence.